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* Continued warm weather drives India’s power demand

* Seasonal increase in renewables started

* Coal-fired power generation for May declines from April, but stocks are still low

* Gas-fired power generation shows little movement, indicating no spot LNG used as fuel

High power demand driven by warm weather

India’s power demand for May 1-17 is estimated at 196 aGW and is higher than expected. The strong demand is driven by sustained warmer-than-normal weather. Temperatures for the first half of the month were 2 C higher year on year for India, while certain regions, such as Delhi, were 4 C higher. The May development is a continuation of the situation in April, when a temperature-driven increase in power demand set a new all-time high record and averaged 194 aGW. The hot weather in Delhi is expected to get a relief over the next few days as rain is forecast for May 20-24.

Renewables have started seasonal increase, effectively easing coal demand

Renewables generation has started its seasonal increase and are estimated at 25 aGW for the first part of the month, which is an increase of 9 aGW year on year. The majority of the increase is from wind, which at 12 aGW has almost doubled year on year. Hydro is also higher at 18 aGW, which is 3 aGW higher on the year. The combined increase from renewables and hydro has taken some pressure off coal-fired power generation, which averaged 137 aGW for May 1-17, a decline of about 5 aGW from April.

Gas-fired power generation continues to stay stable and low at close to 3 aGW, which most likely means spot LNG is still absent from the fuel mix since October 2021

Outlook for summer

S&P Global Commodity Insights assumes normal temperatures going forward and expects power demand for May to September at 182 aGW, which is an increase of 10 aGW year on year. In May 2021, there was a nationwide lockdown for several weeks, which limited power demand. S&P Global expects gas-fired power generation to continue to stay low around 3 aGW, assuming demand for gas averaging 17 million cu m/d, which is 9 million cu m/d lower on the year.

Coal-fired power generation is expected to be 125 aGW, which is an increase of 8 aGW, or about 7% on the year. As discussed in the May 12 International Thermal Coal Scorecard, India’s Ministry of Power issued a directive May 3 asking state-operated utilities to increase coal imports to ensure India’s utilities have 50% of target coal tonnes (38 million mt, so 19 million mt) by end-June. This has Indian buyers reportedly issuing tenders and booking imports, for example, from the US Northern Appalachia exporters, and purchasing other material from port stocks.

India is expected to import 11-13 million mt of thermal coal in April and May 2022 ahead of the monsoon season. S&P Global expects summer-22 imports to average around 14 million mt/month through September, though significant downside risk remains to this forecast. Seaborne imports continue to be constrained by elevated seaborne spot price levels throughout 2022 and this forecast remains above the previous year average of 12 million mt/month for the same period. Indonesia, South Africa, and Australia remain the top suppliers of Indonesian imports.